Oil and gas producer Faroe Petroleum has signed to new banking facilities, worth about £295 million in total, which it said would underpin its growth plans.
The Aberdeen-based firm said a seven-year $250m (£202m) reserve-based lending facility would help finance capital expenditure, operating costs and acquisitions. A further $100m is also available under this deal, which replaces an existing undrawn facility that matures in June 2018.
Meanwhile, a 1 billion Norwegian kroner (£93m) facility has been earmarked to finance the majority of Faroe’s exploration and appraisal costs on the Norwegian continental shelf. Available until the end of 2019, this agreement sees a further 500m kroner made available.
The agreements come after Faroe, which focuses its efforts in UK and Norwegian waters, posted a pre-tax loss of £35.9m for the six months to the end of June, compared with a £365,000 profit for the same period a year earlier.
But the group revised its production guidance upwards and insisted it was “well placed for growth” following its “transformational” acquisition of a number of fields from Danish group Dong. The purchase was completed earlier this month at a price of about $26.7m, almost half the previously announced original consideration of $70.2m.
Faroe chief executive Graham Stewart said: “We are very pleased to have concluded this financing exercise, and to have received such strong support from both our existing bank syndicate and new lenders. The new facilities provide us with substantial funding to support the continuing growth of the group and the financing of our development assets.
“The combination of existing cash, these new credit facilities and cash flow from the company’s significantly enhanced portfolio of producing assets ensures that we are funded to take advantage of the material development upside in our portfolio and continue to invest in our value-enhancing exploration programme on the Norwegian continental shelf.”
The facilities have been provided by BNP Paribas, BMO Capital Markets, Commonwealth Bank of Australia, Danske Bank, DNB Bank, ING, Royal Bank of Scotland, SEB, SR-Bank and Wells Fargo. Rothschild and Pinsent Masons advised Faroe and Watson Farley Williams advised the banks.